Shares of Domino's Pizza Enterprises Ltd (ASX: DMP) have plummeted as much as 8.53% to AU$32.92 apiece on Thursday, marking their lowest point since February 2015. This sharp decline has positioned the company as the top loser on the S&P/ASX 200 Index (XJO).
Flat Store Growth and Closures Impact Investor Sentiment
The dramatic drop follows Domino's announcement after market hours on Wednesday that it anticipates flat store growth for the current fiscal year. Additionally, the company plans to close up to 80 low-volume stores in Japan and 10-20 stores in France. This news has spurred a negative reaction among investors, contributing to the significant decline in the share price.
Positive Outlook for Japan in FY25
Despite the immediate setbacks, Domino's expressed optimism about a potential rebound. The company expects a return to positive same-store sales in Japan for the fiscal year 2025, which commenced this month. Furthermore, Domino's projects overall group store growth of 3%-4% in fiscal 2026.
Brokerages React to Dismal Outlook
In response to the bleak outlook and planned store closures, several brokerages have slashed their price targets for Domino's. Analysts from Morgan Stanley (NYSE:MS) commented, "We see Japan store closures as a step in the right direction in addressing ongoing market underperformance," indicating some long-term optimism despite the current challenges.
Year-to-Date Performance
As of the last close, Domino's stock has fallen 38.8% this year, reflecting significant investor concerns and market challenges.